Fired employee sues Boeing in whistle-blower case

Says company violated audit standards

Published 10:00 pm, Friday, October 31, 2008

Editor's note: The reporter who wrote this story is named in the lawsuit as the reporter who talked with Nicholas Tides.

A fired Boeing employee struck back at his former employer Friday with a federal lawsuit leveling serious charges against the Chicago-based aerospace firm.

Among other things, the lawsuit filed in U.S. District Court in Seattle charges that Boeing was disingenuous in its efforts to comply with the federal Sarbanes-Oxley Act of 2002. It also charges that Boeing hired PricewaterhouseCoopers auditors who violated government-mandated auditing standards.

Separately, the Seattle P-I was working on a report about Boeing's struggles with the 2002 law. In July 2007, the P-I reported that Boeing had failed to prove it could properly protect its computer systems against manipulation, theft and fraud. Such protection is required under the Sarbanes-Oxley Act, enacted in the wake of several corporate scandals.

In September 2007, Boeing fired Tides for having had a conversation with the P-I before the stories were published. Tides worked in Boeing's St. Louis office.

"Instead of deciding to comply with SOx (the law) and avoid retaliation against employees who had engaged in protected activity, Boeing decided to hunt down employees who had assisted the P-I," the lawsuit charges.

"Boeing attempted to coerce plaintiff Tides into keeping silent by creating a hostile work environment including discipline and hostile interrogations," the lawsuit also says. "Boeing caused plaintiff Tides to be followed to intimidate him."

Tides says that he is a whistle-blower, that his reputation has been destroyed and that he has been unable to find new work in spite of numerous attempts. His security clearance with the Department of Defense is up for review. He seeks damages and payment for at least 10 to 15 years.

The lawsuit also seeks "exemplary damages as permitted by law in an amount sufficient to deter Boeing from future violations of law."

Boeing has always maintained that it is compliant with Sarbanes-Oxley and that its financial statements are accurate. A Boeing spokesman said Friday that the company is not aware of the lawsuit and had not seen it, and thus declined to comment. A representative at the Seattle office of PricewaterhouseCoopers did not return a 5 p.m. call seeking comment, as the company's Halloween party had already started.

The P-I spoke with dozens of employees and contractors before the July report was published. Many of them said they feared losing their jobs, but they believed that Boeing's information technology department was mishandling its Sarbanes-Oxley compliance effort.

Evidence filed with the lawsuit shows that Boeing managers manipulated audit results to make it appear as if the company's computer systems were more robust than they actually were, according to Tides' Seattle lawyer, John Tollefsen.

The lawsuit charges that, "Boeing intentionally ignored audit results, fabricated audit results and harassed auditors in order to avoid" publicly disclosing problems to the Securities and Exchange Commission, which regulates companies such as Boeing that trade on the stock market.

PricewaterhouseCoopers both designed and tested information technology controls, essentially "grading its own papers" and violating "its own written standards, industry standards and government mandated standards," the lawsuit says.

To escape paying damages, Boeing has to prove that it fired Tides for a nonretaliatory reason, Tollefsen said.

"Typically in these cases, you can't put people back in their job because there's too much animosity," Tollefsen said. "His whole career is derailed now. He's got to go into another career direction and try to explain to employers that he's not just a bad apple."